Commentary
All Advertising Is Local
- by June 9, 2005
Despite the growth of online commerce, most of our dollars are still spent at stores in our local communities. It's hard to know if that melon for sale online is fresh unless you can thump it. National retailers have targeted promotions regionally for years, and spend billions in local co-op in newspapers, spot radio, and on television. Along comes the disruptive technology of the Internet, which can provide greater ad accountability and the interactivity for longer-form messaging and actual online sales, as well as variable incentives to increase walk-in retail traffic.
Moreover, the Internet provides national advertisers seeking a local marketing push with a pinpoint accuracy that they could never have believed possible outside of the flat, discarded world of Direct Mail. And we are not talking the "fuzzy" world of IP-based Geo-Targeting, whose results are questionable at best.
The big portals have all aggressively gone after the local marketplace with various strategies over the last few years, but failed to gain traction because of the scale of developing local content resources required. Messages not only need to be targeted, they need context and environment. The massive content creation infrastructure of a radio or TV station in even a mid-sized market can be dozens of people--and in the case of newspapers, hundreds. The portals abandoned their dreams of playing in this costly space (remember Sidewalk and Digital Cities?) leaving the "traditional" local media companies the owners of the uniquely valuable affinity group that wants information and entertainment focused on their community.
Local media that produces content sufficient to support the coming onslaught of local online advertising are aggregating into networks to provide advertisers with centrally managed, one-stop shops for reaching locally and regionally targeted segments of the country through a single venue. Their mix of true local content, mom and pop advertisers, and comfortable local media brands makes a perfect fit for national advertisers who want an environment that makes them seem like part of the community. Advertisers also benefit from being associated with local media brands with whom consumers have built pre-established relationships through their morning drive to work, daily subscriptions, and the nightly news.
Being seen in a medium that is part of the local fabric of a community is an attractive proposition for many advertisers, and one of the same reasons why companies like Wal-Mart sponsor Little League teams and Coke ads are in Minor League Baseball stadiums.
As multimedia publishing tools become easier and easier to use, local media will become increasingly "digitally savvy," and will offer everything the portals can (and many they can't), and will fight to hold the ground that has traditionally been theirs. Local and regional advertisers have been their bread and butter for decades (if not centuries, in the case of newspapers). The rolling over that media properties did in the mid-nineties to the likes of AOL and Yahoo! will not be repeated locally. There is too much at stake.
According to a recent Borrell Research report, local online revenues are expected to grow by 46% to $3.9B in 2005. The biggest benefactors in this surge? Online properties for radio and TV stations. They experienced 94% and 58% jumps, respectively, in Web revenues in 2004, and have the unique differentiator from other local media in the ability to take advantage of the broadband boom through innovations like podcasting and streaming.
Local online media makes up less than 5% of the current online ad pie, but with tightening inventory at the top portals, better local targeting, the advent of local media networks, and the emergence of "broadband ready" local content, the stars have aligned for players in the local online market to take another slice.
